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Russia vs. Ukraine

Economy

RussiaUkraine
Economy - overview

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy towards a more market-based system. Both economic growth and reform have stalled in recent years, however, and Russia remains a predominantly statist economy with a high concentration of wealth in officials' hands. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy, transportation, banking, and defense-related sectors. The protection of property rights is still weak, and the state continues to interfere in the free operation of the private sector.

Russia is one of the world's leading producers of oil and natural gas, and is also a top exporter of metals such as steel and primary aluminum. Russia is heavily dependent on the movement of world commodity prices as reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. The economy, which had averaged 7% growth during the 1998-2008 period as oil prices rose rapidly, has seen diminishing growth rates since then due to the exhaustion of Russia’s commodity-based growth model.

A combination of falling oil prices, international sanctions, and structural limitations pushed Russia into a deep recession in 2015, with GDP falling by close to 2.8%. The downturn continued through 2016, with GDP contracting another 0.2%, but was reversed in 2017 as world demand picked up. Government support for import substitution has increased recently in an effort to diversify the economy away from extractive industries.

After Russia, the Ukrainian Republic was the most important economic component of the former Soviet Union, producing about four times the output of the next-ranking republic. Its fertile black soil accounted for more than one fourth of Soviet agricultural output, and its farms provided substantial quantities of meat, milk, grain, and vegetables to other republics. Likewise, its diversified heavy industry supplied unique equipment such as large diameter pipes and vertical drilling apparatus, and raw materials to industrial and mining sites in other regions of the former USSR.

 

Shortly after independence in August 1991, the Ukrainian Government liberalized most prices and erected a legal framework for privatization, but widespread resistance to reform within the government and the legislature soon stalled reform efforts and led to some backtracking. Output by 1999 had fallen to less than 40% of the 1991 level. Outside institutions - particularly the IMF encouraged Ukraine to quicken the pace and scope of reforms to foster economic growth. Ukrainian Government officials eliminated most tax and customs privileges in a March 2005 budget law, bringing more economic activity out of Ukraine's large shadow economy. From 2000 until mid-2008, Ukraine's economy was buoyant despite political turmoil between the prime minister and president. The economy contracted nearly 15% in 2009, among the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for extending Russia's lease on its naval base in Crimea.

 

Ukraine’s oligarch-dominated economy grew slowly from 2010 to 2013 but remained behind peers in the region and among Europe’s poorest. After former President YANUKOVYCH fled the country during the Revolution of Dignity, Ukraine’s economy fell into crisis because of Russia’s annexation of Crimea, military conflict in the eastern part of the country, and a trade war with Russia, resulting in a 17% decline in GDP, inflation at nearly 60%, and dwindling foreign currency reserves. The international community began efforts to stabilize the Ukrainian economy, including a March 2014 IMF assistance package of $17.5 billion, of which Ukraine has received four disbursements, most recently in April 2017, bringing the total disbursed as of that date to approximately $8.4 billion. Ukraine has made progress on reforms designed to make the country prosperous, democratic, and transparent, including creation of a national anti-corruption agency, overhaul of the banking sector, establishment of a transparent VAT refund system, and increased transparency in government procurement. But more improvements are needed, including fighting corruption, developing capital markets, improving the business environment to attract foreign investment, privatizing state-owned enterprises, and land reform. The fifth tranche of the IMF program, valued at $1.9 billion, was delayed in mid-2017 due to lack of progress on outstanding reforms, including adjustment of gas tariffs to import parity levels and adoption of legislation establishing an independent anti-corruption court.

 

Russia’s occupation of Crimea in March 2014 and ongoing Russian aggression in eastern Ukraine have hurt economic growth. With the loss of a major portion of Ukraine’s heavy industry in Donbas and ongoing violence, the economy contracted by 6.6% in 2014 and by 9.8% in 2015, but it returned to low growth in in 2016 and 2017, reaching 2.3% and 2.0%, respectively, as key reforms took hold. Ukraine also redirected trade activity towards the EU following the implementation of a bilateral Deep and Comprehensive Free Trade Agreement, displacing Russia as its largest trading partner. A prohibition on commercial trade with separatist-controlled territories in early 2017 has not impacted Ukraine’s key industrial sectors as much as expected, largely because of favorable external conditions. Ukraine returned to international debt markets in September 2017, issuing a $3 billion sovereign bond.

GDP (purchasing power parity)
$4.016 trillion (2017 est.)
$3.955 trillion (2016 est.)
$3.963 trillion (2015 est.)

note: data are in 2017 dollars

$369.6 billion (2017 est.)
$360.5 billion (2016 est.)
$351.9 billion (2015 est.)

note: data are in 2017 dollars

GDP - real growth rate
1.34% (2019 est.)
2.54% (2018 est.)
1.83% (2017 est.)
3.24% (2019 est.)
3.41% (2018 est.)
2.48% (2017 est.)
GDP - per capita (PPP)
$27,900 (2017 est.)
$27,500 (2016 est.)
$27,500 (2015 est.)

note: data are in 2017 dollars

$8,800 (2017 est.)
$8,500 (2016 est.)
$8,300 (2015 est.)

note: data are in 2017 dollars

GDP - composition by sector
agriculture: 4.7% (2017 est.)
industry: 32.4% (2017 est.)
services: 62.3% (2017 est.)
agriculture: 12.2% (2017 est.)
industry: 28.6% (2017 est.)
services: 60% (2017 est.)
Population below poverty line
13.3% (2015 est.)
3.8% (2016 est.)
Household income or consumption by percentage share
lowest 10%: 2.3%
highest 10%: 32.2% (2012 est.)
lowest 10%: 4.2%
highest 10%: 21.6% (2015 est.)
Inflation rate (consumer prices)
3.7% (2017 est.)
7.1% (2016 est.)
14.4% (2017 est.)
13.9% (2016 est.)

note: Excluding the temporarily occupied territories of the Autonomous Republic of Crimea, the city of Sevastopol and part of the anti-terrorist operation zone

Labor force
69.923 million (2020 est.)
17.99 million (2017 est.)
Labor force - by occupation
agriculture: 9.4%
industry: 27.6%
services: 63% (2016 est.)
agriculture: 5.8%
industry: 26.5%
services: 67.8% (2014)
Unemployment rate
4.6% (2019 est.)
4.8% (2018 est.)
8.89% (2019 est.)
9.42% (2018 est.)

note: officially registered workers; large number of unregistered or underemployed workers

Distribution of family income - Gini index
41.2 (2015)
41.9 (2013)
25.5 (2015)
28.2 (2009)
Budget
revenues: 258.6 billion (2017 est.)
expenditures: 281.4 billion (2017 est.)
revenues: 29.82 billion (2017 est.)
expenditures: 31.55 billion (2017 est.)

note: this is the planned, consolidated budget

Industries
complete range of mining and extractive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; defense industries (including radar, missile production, advanced electronic components), shipbuilding; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, handicrafts
coal, electric power, ferrous and nonferrous metals, machinery and transport equipment, chemicals, food processing
Industrial production growth rate
-1% (2017 est.)
3.1% (2017 est.)
Agriculture - products
grain, sugar beets, sunflower seeds, vegetables, fruits; beef, milk
grain, sugar beets, sunflower seeds, vegetables; beef, milk
Exports
$353 billion (2017 est.)
$281.9 billion (2016 est.)
$39.69 billion (2017 est.)
$33.56 billion (2016 est.)
Exports - commodities
petroleum and petroleum products, natural gas, metals, wood and wood products, chemicals, and a wide variety of civilian and military manufactures
ferrous and nonferrous metals, fuel and petroleum products, chemicals, machinery and transport equipment, foodstuffs
Exports - partners
China 10.9%, Netherlands 10%, Germany 7.1%, Belarus 5.1%, Turkey 4.9% (2017)
Russia 9.2%, Poland 6.5%, Turkey 5.6%, India 5.5%, Italy 5.2%, China 4.6%, Germany 4.3% (2017)
Imports
$238 billion (2017 est.)
$191.6 billion (2016 est.)
$49.06 billion (2017 est.)
$40.5 billion (2016 est.)
Imports - commodities
machinery, vehicles, pharmaceutical products, plastic, semi-finished metal products, meat, fruits and nuts, optical and medical instruments, iron, steel
energy, machinery and equipment, chemicals
Imports - partners
China 21.2%, Germany 10.7%, US 5.6%, Belarus 5%, Italy 4.5%, France 4.2% (2017)
Russia 14.5%, China 11.3%, Germany 11.2%, Poland 7%, Belarus 6.7%, US 5.1% (2017)
Debt - external
$539.6 billion (31 December 2017 est.)
$434.8 billion (31 December 2016 est.)
$130 billion (31 December 2017 est.)
$121.1 billion (31 December 2016 est.)
Exchange rates
Russian rubles (RUB) per US dollar -
58.39 (2017 est.)
67.056 (2016 est.)
67.056 (2015 est.)
60.938 (2014 est.)
38.378 (2013 est.)
hryvnia (UAH) per US dollar -
26.71 (2017 est.)
25.5513 (2016 est.)
25.5513 (2015 est.)
21.8447 (2014 est.)
11.8867 (2013 est.)
Fiscal year
calendar year
calendar year
Public debt
15.5% of GDP (2017 est.)
16.1% of GDP (2016 est.)

note: data cover general government debt and include debt instruments issued (or owned) by government entities other than the treasury; the data include treasury debt held by foreign entities; the data include debt issued by subnational entities, as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement, medical care, and unemployment, debt instruments for the social funds are not sold at public auctions

71% of GDP (2017 est.)
81.2% of GDP (2016 est.)

note: the total public debt of $64.5 billion consists of: domestic public debt ($23.8 billion); external public debt ($26.1 billion); and sovereign guarantees ($14.6 billion)

Reserves of foreign exchange and gold
$432.7 billion (31 December 2017 est.)
$377.7 billion (31 December 2016 est.)
$18.81 billion (31 December 2017 est.)
$15.54 billion (31 December 2016 est.)
Current Account Balance
$65.311 billion (2019 est.)
$115.68 billion (2018 est.)
-$4.124 billion (2019 est.)
-$6.432 billion (2018 est.)
GDP (official exchange rate)
$1.578 trillion (2017 est.)
$112.1 billion (2017 est.)
Stock of direct foreign investment - at home
$535.2 billion (31 December 2017 est.)
$461.7 billion (31 December 2016 est.)
$67.22 billion (31 December 2017 est.)
$64.95 billion (31 December 2016 est.)
Stock of direct foreign investment - abroad
$470.9 billion (31 December 2017 est.)
$418 billion (31 December 2016 est.)
$7.59 billion (31 December 2017 est.)
$7.983 billion (31 December 2016 est.)
Market value of publicly traded shares
$635.9 billion (31 December 2016 est.)
$393.2 billion (31 December 2015 est.)
$385.9 billion (31 December 2014 est.)
$20.71 billion (31 December 2012 est.)
$25.56 billion (31 December 2011 est.)
$39.46 billion (31 December 2010 est.)
Central bank discount rate
10% (31 December 2016 est.)
11% (3 August 2015)

note: this is the so-called refinancing rate, but in Russia banks do not get refinancing at this rate; this is a reference rate used primarily for fiscal purposes

22% (23 December 2015)
7.5% (31 January 2012)
Commercial bank prime lending rate
10.55% (31 December 2017 est.)
12.59% (31 December 2016 est.)
16.38% (31 December 2017 est.)
19.24% (31 December 2016 est.)
Stock of domestic credit
$940.4 billion (31 December 2017 est.)
$827.3 billion (31 December 2016 est.)
$63.63 billion (31 December 2017 est.)
$61.65 billion (31 December 2016 est.)
Stock of narrow money
$255.2 billion (31 December 2017 est.)
$195.9 billion (31 December 2016 est.)
$21.92 billion (31 December 2017 est.)
$19.49 billion (31 December 2016 est.)
Stock of broad money
$255.2 billion (31 December 2017 est.)
$195.9 billion (31 December 2016 est.)
$21.92 billion (31 December 2017 est.)
$19.49 billion (31 December 2016 est.)
Taxes and other revenues
16.4% (of GDP) (2017 est.)
26.6% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)
-1.4% (of GDP) (2017 est.)
-1.5% (of GDP) (2017 est.)
Unemployment, youth ages 15-24
total: 17%
male: 16.2%
female: 17.9% (2018 est.)
total: 17.9%
male: 16.9%
female: 19.3% (2018 est.)
GDP - composition, by end use
household consumption: 52.4% (2017 est.)
government consumption: 18% (2017 est.)
investment in fixed capital: 21.6% (2017 est.)
investment in inventories: 2.3% (2017 est.)
exports of goods and services: 26.2% (2017 est.)
imports of goods and services: -20.6% (2017 est.)
household consumption: 66.5% (2017 est.)
government consumption: 20.4% (2017 est.)
investment in fixed capital: 16% (2017 est.)
investment in inventories: 4.7% (2017 est.)
exports of goods and services: 47.9% (2017 est.)
imports of goods and services: -55.6% (2017 est.)
Gross national saving
26.5% of GDP (2017 est.)
25.9% of GDP (2016 est.)
26.8% of GDP (2015 est.)
18.9% of GDP (2017 est.)
20.2% of GDP (2016 est.)
17.7% of GDP (2015 est.)

Source: CIA Factbook